In the 1990s we identified the fact that, since becoming a major oil producer in 1992, Papua New Guinea was one of the few oil producing countries in the world with no domestic oil refinery. The potential to replace imports and avoid transportation costs provided an opportunity for a “niche” refinery sized to supply Papua New Guinea and nearby markets.
We believed that an installation whose capacity matched that “niche” market would be economically attractive. We began implementing a business plan to capture that opportunity by sourcing an existing refinery and by working with the State to further enhance the project economics.
On January 31, 2005, our refinery achieved practical completion. Practical completion means construction of the refinery has been completed and that the refinery has satisfactorily completed the reliability and performance tests which were conducted as part of the acceptance and handover process.
We are currently the sole refiner of hydrocarbons in Papua New Guinea.
Our refinery is located across the harbor from Port Moresby, the capital city of Papua New Guinea. We import crude oil for processing at our refinery and resell the refined products primarily within Papua New Guinea at IPP, which is basically the price that would be paid in Papua New Guinea for a refined product that had been imported.
We also distribute a large portion of the production from our refinery through our retail distribution network.
Jet fuel, diesel and gasoline are the primary products that we produce for the domestic market. The refining process also results in the production of two Naphtha grades and low sulfur waxy residue. To the extent that we do not convert the Naphtha to gasoline, we export it to the local and Asian markets in two grades, light Naphtha and mixed Naphtha, which are predominately used as petrochemical feedstock.
LSWR can be and is being sold as fuel for power generation domestically, local bunker fuel sales with the majority exported for use in other complex refineries as cracker feedstock or supply to other end users, including power generators.